Nexa Resources S.A.(NEXA) - 2024 Q3 - Quarterly Report

Condensed Consolidated Interim Financial Statements Nexa Resources S.A. presents its interim financial statements, detailing its income, comprehensive income, balance sheet, cash flows, and changes in equity for the periods ended September 30, 2024 Condensed Consolidated Interim Income Statement The company achieved net income in Q3 2024, reversing prior-year losses, driven by higher revenues and gross profit Key Income Statement Figures (USD thousands) | Metric | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Net Revenues | 709,476 | 649,334 | 2,025,563 | 1,943,356 | | Gross Profit | 126,580 | 68,033 | 394,773 | 229,698 | | Operating Income (Loss) | 84,761 | (3,622) | 154,683 | (74,902) | | Net Financial Results | (41,460) | (66,831) | (227,858) | (133,603) | | Income (Loss) before Income Tax | 48,743 | (64,125) | (56,676) | (191,102) | | Net Income (Loss) for the period | 5,983 | (64,484) | (76,012) | (183,051) | | Basic and Diluted Loss per Share (USD) | (0.04) | (0.57) | (0.80) | (1.49) | - Net revenues increased by 9.26% for the three-month period and 4.23% for the nine-month period year-over-year, primarily due to higher zinc and copper metal prices and increased mining segment sales volumes[3][41] - Operating income significantly improved, turning from a loss of USD 3,622 thousand in Q3 2023 to an income of USD 84,761 thousand in Q3 2024, and from a loss of USD 74,902 thousand in 9M 2023 to an income of USD 154,683 thousand in 9M 2024[3] Condensed Consolidated Interim Statement of Comprehensive Income The company's total comprehensive income for the three-month period ended September 30, 2024, showed a positive shift compared to a significant loss in the prior year, mainly influenced by translation adjustments of foreign subsidiaries and other comprehensive income items Key Comprehensive Income Figures (USD thousands) | Metric | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Net Income (Loss) for the period | 5,983 | (64,484) | (76,012) | (183,051) | | Translation adjustment of foreign subsidiaries | 18,449 | (38,921) | (97,543) | 49,145 | | Other comprehensive income (loss), net of income tax | 17,965 | (39,827) | (97,726) | 49,379 | | Total comprehensive income (loss) for the period | 23,948 | (104,311) | (173,738) | (133,672) | - Total comprehensive income for the three-month period ended September 30, 2024, was USD 23,948 thousand, a significant improvement from a loss of USD 104,311 thousand in the same period of 2023[4] - Translation adjustment of foreign subsidiaries contributed positively with USD 18,449 thousand in Q3 2024, reversing a negative adjustment of USD 38,921 thousand in Q3 2023[4] Condensed Consolidated Interim Balance Sheet As of September 30, 2024, Nexa Resources S.A. reported a slight decrease in total assets and total liabilities compared to December 31, 2023. Shareholders' equity attributable to NEXA's shareholders also decreased, while non-controlling interests increased Key Balance Sheet Figures (USD thousands) | Metric | September 30, 2024 | December 31, 2023 | |:---|---:|---:| | Total Assets | 4,769,704 | 4,904,097 | | Total Liabilities | 3,503,972 | 3,452,060 | | Shareholders' Equity (Attributable to NEXA's shareholders) | 998,957 | 1,197,324 | | Shareholders' Equity (Attributable to non-controlling interests) | 266,775 | 254,713 | | Total Shareholders' Equity | 1,265,732 | 1,452,037 | - Current assets increased to USD 1,196,452 thousand from USD 1,059,826 thousand, primarily driven by higher cash and cash equivalents and inventory[6] - Non-current assets decreased to USD 3,565,245 thousand from USD 3,844,271 thousand, mainly due to a reduction in Property, plant and equipment and Intangible assets[6] Condensed Consolidated Interim Statement of Cash Flows Nexa Resources S.A. reported a decrease in net cash provided by operating activities for the nine-month period ended September 30, 2024, compared to the prior year. However, financing activities turned positive, leading to an overall increase in cash and cash equivalents at the end of the period Key Cash Flow Figures (USD thousands) | Metric | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Net cash provided by operating activities | 111,917 | 100,342 | 107,603 | 142,546 | | Net cash used in investing activities | (43,800) | (59,778) | (173,973) | (164,956) | | Net cash provided by (used in) financing activities | (18,441) | (24,215) | 129,187 | (67,241) | | Increase (decrease) in cash and cash equivalents | 51,263 | 13,617 | 55,950 | (83,501) | | Cash and cash equivalents at the end of the period | 513,209 | 414,325 | 513,209 | 414,325 | - Cash provided by operating activities for the nine-month period decreased by 24% to USD 107,603 thousand in 2024 from USD 142,546 thousand in 2023[8] - Financing activities shifted from a net cash outflow of USD 67,241 thousand in 9M 2023 to a net cash inflow of USD 129,187 thousand in 9M 2024, primarily due to new loans and financings[8] Condensed Consolidated Interim Statement of Changes in Shareholders' Equity Nexa Resources S.A.'s total shareholders' equity decreased from USD 1,452,037 thousand at the beginning of 2024 to USD 1,265,732 thousand by September 30, 2024. This was mainly influenced by the net loss for the period and other comprehensive losses, partially offset by an increase in non-controlling interests Key Shareholders' Equity Changes (USD thousands) | Metric | January 1, 2024 | September 30, 2024 | |:---|---:|---:| | Capital | 132,438 | 132,438 | | Share premium | 1,012,629 | 1,012,629 | | Additional paid in capital | 1,245,418 | 1,245,418 | | Retained earnings (cumulative deficit) | (1,035,032) | (1,141,561) | | Accumulated other comprehensive loss | (158,129) | (249,967) | | Total NEXA's shareholders | 1,197,324 | 998,957 | | Noncontrolling interests | 254,713 | 266,775 | | Total shareholders' equity | 1,452,037 | 1,265,732 | - Retained earnings (cumulative deficit) worsened from USD (1,035,032) thousand at January 1, 2024, to USD (1,141,561) thousand by September 30, 2024, reflecting the net loss for the period[13] - Accumulated other comprehensive loss increased from USD (158,129) thousand to USD (249,967) thousand during the nine-month period[13] Notes to the Condensed Consolidated Interim Financial Statements This section provides detailed explanatory notes and disclosures supporting the condensed consolidated interim financial statements 1 General Information Nexa Resources S.A. is a Luxembourg-domiciled mining and smelting company, detailing its operations and key corporate events - Nexa Resources S.A. operates three polymetallic mines in Peru and two in Brazil, including the Aripuanã mine which transitioned to ongoing operation by June 2024. It also operates one zinc smelter in Peru and two in Brazil[15] - Nexa BR entered a 3-month Note agreement of EUR 27,917 (USD 30,244) in March 2024, settled in June 2024. It also issued BRL 650,000 (USD 130,099) in debentures in April 2024 and drew an ESG-linked credit line of BRL 200,000 (USD 40,030) from BNDES in June 2024[16] - The company concluded a USD 600,000 bond offering in April 2024, using proceeds to repurchase parts of its 2027 and 2028 notes[16] - Nexa successfully sold the Morro Agudo Complex in Brazil in July 2024 for approximately BRL 60,565 (USD 10,895) and signed definitive agreements to sell its non-operational Peruvian subsidiaries, Minera Pampa de Cobre S.A.C. and Compañía Minera Cerro Colorado S.A.C., during Q3 2024[16][18] - Pollarix's shareholders approved an additional dividend distribution for FY2023, with Nexa BR receiving USD 3,018 and non-controlling interests receiving USD 11,654. Enercan also approved an additional dividend, entitling Pollarix to receive USD 23,319[18] 2 Information by Business Segment Segment performance, measured by Adjusted EBITDA, significantly improved for Mining and Smelting in Q3 and 9M 2024 Adjusted EBITDA by Segment (USD thousands) | Segment | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Mining | 128,135 | 44,218 | 342,285 | 109,593 | | Smelting | 54,669 | 49,813 | 173,960 | 190,820 | | Consolidated Adjusted EBITDA | 182,911 | 86,565 | 517,425 | 296,213 | - Mining segment Adjusted EBITDA increased by 189.78% in Q3 2024 and 212.33% in 9M 2024, reflecting improved operational performance[21][23] - Smelting segment Adjusted EBITDA increased by 9.75% in Q3 2024 but decreased by 8.83% in 9M 2024[21][23] - Aripuanã mine completed its ramp-up phase at the end of Q2 2024, with idle capacity costs of USD 25,499 thousand for the nine-month period[25] - Dividends received from associate company Enercan are now included in Adjusted EBITDA starting 2024, as the CODM considers them jointly with Nexa's energy costs[28] 3 Basis of Preparation of the Condensed Consolidated Interim Financial Statements Interim financial statements are prepared under IAS 34, with comparative 2023 data revised due to a right-of-use asset misstatement - The condensed consolidated interim financial statements are prepared in accordance with IAS 34 Interim Financial Reporting, using accounting principles consistent with IFRS Accounting Standards[29] - A misstatement was identified in previously issued financial statements for 2023 and 2022, and interim periods, related to the non-recognition of right-of-use assets and lease liabilities. This led to a revision of comparative information for the year ended December 31, 2023, and the period ended September 30, 2023[30][31] - The adjustment resulted in the recognition of right-of-use assets of USD 63,590 thousand and lease liabilities of USD 68,187 thousand as of December 31, 2023, impacting income statements through amortization and interest expense[31] 4 Net Revenues Net revenues increased due to higher metal prices and mining sales volumes, with a silver stream remeasurement adjustment Net Revenues Breakdown (USD thousands) | Metric | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Gross billing | 773,757 | 713,640 | 2,211,610 | 2,144,955 | | Billing from products | 749,380 | 689,288 | 2,136,935 | 2,063,549 | | Taxes on sales | (62,916) | (63,311) | (183,638) | (199,646) | | Net revenues | 709,476 | 649,334 | 2,025,563 | 1,943,356 | - Billing from products increased mainly due to higher zinc and copper metal prices in the three-month period and higher volume sold in the mining segment for the nine-month period[41] - Nexa recognized a USD 21,084 thousand reduction (vs. USD 2,323 thousand in 2023) as an annual remeasurement adjustment to its silver stream revenue, reflecting higher long-term prices and an updated mining plan for Cerro Lindo[41] 5 Expenses by Nature Total expenses by nature showed mixed trends, with raw materials decreasing and idle capacity costs recognized for certain mines Expenses by Nature (USD thousands) | Expense Category | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Raw materials and consumables used | (325,336) | (326,757) | (858,306) | (954,045) | | Third-party services | (145,421) | (153,107) | (433,645) | (453,629) | | Depreciation and amortization | (82,281) | (75,607) | (233,561) | (223,501) | | Employee benefit expenses | (63,784) | (68,497) | (206,445) | (199,208) | | Other expenses | (11,626) | (19,891) | (38,794) | (50,043) | | Total Expenses | (628,448) | (643,859) | (1,770,751) | (1,880,426) | - Raw materials and consumables used decreased in the nine-month period ended September 30, 2024, due to a decrease in the volume sold in the Company's smelting segment[42] - Idle capacity costs of USD 3,661 thousand were recognized in Cost of sales for El Porvenir and USD 34,591 thousand (including USD 9,092 thousand depreciation) for Aripuanã during its ramp-up phase for the nine-month period[42] 6 Other Income and Expenses, Net Net other income and expenses resulted in a net expense, influenced by fair value changes and asset retirement obligations Other Income and Expenses, Net (USD thousands) | Item | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | ICMS tax incentives | - | 7,911 | - | 25,139 | | Changes in fair value of offtake agreement | (3,397) | 998 | (23,971) | 1,013 | | (Loss) gain on sale and write-off of PP&E | (6,720) | 115 | (6,923) | (1,172) | | Changes in asset retirement, restoration and environmental obligations | (5,452) | 1,908 | (23,840) | 1,205 | | Changes in fair value of energy forward contracts | 3,636 | 2,272 | 11,827 | (7,429) | | Divestment and restructuring | 4,713 | - | (901) | - | | Total Other income and expenses, net | (13,859) | (7,187) | (74,730) | (78,735) | - The new Brazilian law (No. 14,789/2023) effective 2024, revokes the previous tax treatment of ICMS investment subsidies, leading Nexa to no longer exclude these incentives from IRPJ/CSLL basis[43][44] - Changes in asset retirement, restoration and environmental obligations were mainly due to an update of the remeasurement discount rate and an addition of asset retirement obligation related to non-operational structures in Peru[44] - Divestment and restructuring refers to estimated obligations related to restructuring expenses for the Morro Agudo sale agreement[44] 7 Net Financial Results Net financial results showed a significant loss, primarily due to increased financial expenses and foreign exchange losses Net Financial Results (USD thousands) | Item | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Financial income | 6,206 | 7,802 | 17,994 | 20,966 | | Financial expenses | (59,376) | (47,233) | (172,786) | (154,891) | | Other financial items, net | 11,710 | (27,400) | (73,066) | 322 | | Total Net financial results | (41,460) | (66,831) | (227,858) | (133,603) | - Financial expenses increased significantly, with interest on loans and financings rising to USD 34,023 thousand in Q3 2024 (from USD 24,699 thousand in Q3 2023) and to USD 96,909 thousand in 9M 2024 (from USD 84,031 thousand in 9M 2023)[45] - Foreign exchange effects resulted in a gain of USD 10,889 thousand in Q3 2024, but a significant loss of USD 74,779 thousand in 9M 2024, primarily due to the volatility and depreciation of the Brazilian Real against the USD[44][45] - Bond repurchase expenses of USD 7,069 thousand were recognized for the nine-month period ended September 2024[45] 8 Current and Deferred Income Tax Income tax expense was reported, with no Pillar Two top-up tax exposure, but significant uncertain tax positions remain Income Tax Benefit (Expense) (USD thousands) | Item | Three-month 2024 | Three-month 2023 | Nine-month 2024 | Nine-month 2023 | |:---|---:|---:|---:|---:| | Income tax benefit at statutory rate | (12,157) | 15,993 | 14,135 | 47,661 | | ICMS tax incentives permanent difference | - | 2,690 | - | 8,547 | | Tax effects of translation of non-monetary assets/liabilities | 14,553 | (15,265) | 6,838 | 6,853 | | Unrecognized deferred tax on net operating losses | (10,627) | (12,212) | (25,721) | (41,262) | | Other permanent tax differences | (3,719) | (7,805) | (4,890) | (10,002) | | Income tax benefit (expense) | (42,760) | (359) | (19,336) | 8,051 | | Current | (30,777) | (17,851) | (64,787) | (51,308) | | Deferred Income tax benefit (expense) | (11,983) | 17,492 | 45,451 | 59,359 | - The company assessed its potential exposure to Pillar Two income taxes based on OECD transitional safe harbor rules and has not identified any potential exposure to top-up tax[46] - New transfer pricing rules in Brazil, effective January 1, 2024, are being assessed for their impact on related party transactions[46] - Contingent liabilities for uncertain tax positions, mainly related to Cerro Lindo's stability agreement and transfer pricing adjustments, increased to USD 480,640 thousand as of September 30, 2024 (from USD 478,329 thousand at Dec 31, 2023)[47] 9 Financial Instruments Nexa's financial assets and liabilities are categorized by amortized cost, fair value through profit or loss (FVTPL), and fair value through other comprehensive income (FVOCI). As of September 30, 2024, a significant portion of assets and liabilities were measured at amortized cost, with a notable amount at FVTPL, reflecting the company's use of derivatives and other fair-valued instruments Financial Assets by Category (USD thousands) | Category | Amortized cost | Fair value through profit or loss | Fair value through other comprehensive income | September 30, 2024 Total | |:---|---:|---:|---:|---:| | Cash and cash equivalents | 513,209 | - | - | 513,209 | | Financial investments | 11,714 | - | - | 11,714 | | Other financial instruments | - | 19,618 | - | 19,618 | | Trade accounts receivables | 33,297 | 127,422 | - | 160,719 | | Investments in equity instruments | - | - | 5,807 | 5,807 | | Total Assets | 558,222 | 147,040 | 5,807 | 711,069 | Financial Liabilities by Category (USD thousands) | Category | Amortized cost | Fair value through profit or loss | Fair value through other comprehensive income | September 30, 2024 Total | |:---|---:|---:|---:|---:| | Loans and financings | 1,771,846 | 91,498 | - | 1,863,344 | | Lease liabilities | 71,025 | - | - | 71,025 | | Other financial instruments | - | 63,057 | - | 63,057 | | Trade payables | 400,621 | - | - | 400,621 | | Confirming payables | 227,226 | - | - | 227,226 | | Total Liabilities | 2,495,964 | 154,555 | - | 2,650,519 | 10 Other Financial Instruments Nexa's other financial instruments primarily consist of derivative financial instruments, offtake agreements measured at FVTPL, and energy futures contracts. The fair value of these instruments, particularly the offtake agreement, experienced significant changes during the nine-month period, reflecting market price fluctuations and contract terms Composition of Other Financial Instruments (USD thousands) | Item | Derivatives financial instruments | Offtake agreement measured at FVTPL | Energy futures contracts at FVTPL | September 30, 2024 Total | |:---|---:|---:|---:|---:| | Current assets | 19,617 | - | - | 19,617 | | Non-current assets | - | 1 | - | 1 | | Current liabilities | (18,824) | (6,816) | (399) | (26,039) | | Non-current liabilities | (225) | (34,250) | (2,543) | (37,018) | | Other financial instruments, net | 569 | (41,066) | (2,942) | (43,439) | - The fair value of the offtake agreement measured at FVTPL changed by USD (23,971) thousand for the nine-month period ended September 30, 2024, compared to USD 1,013 thousand in the prior year[54] - Changes in fair value of derivative financial instruments (mismatches of quotational periods) resulted in a realized loss of USD 2,617 thousand for the nine-month period ended September 30, 2024[53] - The offtake agreement for Aripuanã copper concentrate includes a price cap, leading to revenue recognition according to fair values when copper prices exceed the cap[53] 11 Inventory Nexa's total inventory increased to USD 394,687 thousand as of September 30, 2024, from USD 339,671 thousand at December 31, 2023. This increase was primarily driven by higher semi-finished products due to improved production performance and increased raw materials from third-party zinc concentrate purchases Inventory Composition (USD thousands) | Item | September 30, 2024 | December 31, 2023 | |:---|---:|---:| | Finished products | 116,231 | 97,396 | | Semi-finished products | 119,641 | 90,220 | | Raw materials | 86,680 | 69,439 | | Auxiliary materials and consumables | 119,004 | 121,126 | | Inventory provisions | (46,869) | (38,510) | | Total Inventory | 394,687 | 339,671 | - Semi-finished products increased mainly due to better production performance of toasters, with a significant increase in Calcina and Zinc Calcina products[55] - Raw materials increased due to higher volumes and prices of zinc concentrates purchased from third parties to supply the smelting segment[55] 12 Property, Plant and Equipment Property, plant and equipment (PP&E) decreased to USD 2,226,039 thousand as of September 30, 2024, from USD 2,438,614 thousand at the beginning of the year. This reduction was influenced by depreciation, foreign exchange effects, and assets classified as held for sale, partially offset by additions Changes in Property, Plant and Equipment (USD thousands) | Item | September 30, 2024 Total | September 30, 2023 Total | |:---|---:|---:| | Balance at the beginning of the period | 2,438,614 | 2,295,275 | | Additions | 192,726 | 199,350 | | Disposals and write-offs | (7,112) | (1,372) | | Depreciation | (164,473) | (158,626) | | Impairment (loss) reversal of long-lived assets | (34,933) | (59,070) | | Classified as assets held for sale | (13,453) | - | | Foreign exchange effects | (181,983) | 63,421 | | Balance at the end of the period | 2,226,039 | 2,336,913 | - Additions to PP&E were USD 192,726 thousand for the nine-month period ended September 30, 2024[57] - Foreign exchange effects resulted in a significant decrease of USD 181,983 thousand in PP&E for the nine-month period[57] - An impairment loss of USD 34,933 thousand was recognized for long-lived assets during the nine-month period[57] 13 Intangible Assets Intangible assets decreased to USD 861,404 thousand as of September 30, 2024, from USD 909,279 thousand at the beginning of the year. This change was primarily due to amortization, foreign exchange effects, and disposals, partially offset by additions and impairment reversals Changes in Intangible Assets (USD thousands) | Item | September 30, 2024 Total | September 30, 2023 Total | |:---|---:|---:| | Balance at the beginning of the period | 909,279 | 1,016,927 | | Additions | 4,920 | 1,506 | | Disposals and write-offs | (342) | - | | Amortization | (52,019) | (54,275) | | Impairment reversal (loss) of long-lived assets | 9,534 | (27) | | Foreign exchange effects | (10,835) | 2,062 | | Balance at the end of the period | 861,404 | 966,916 | - Amortization of intangible assets amounted to USD 52,019 thousand for the nine-month period ended September 30, 2024[58] - An impairment reversal of USD 9,534 thousand was recognized for long-lived intangible assets[58] 14 Right-of-Use Assets and Lease Liabilities Right-of-use assets decreased to USD 65,047 thousand and lease liabilities decreased to USD 71,025 thousand as of September 30, 2024. This was influenced by amortization, payments, disposals, and foreign exchange effects, despite new contracts Changes in Right-of-Use Assets (USD thousands) | Item | September 30, 2024 Total | September 30, 2023 Total | |:---|---:|---:| | Balance at the beginning of the year | 74,818 | 26,998 | | New contracts | 17,004 | 58,117 | | Disposals and write-offs | (2,602) | (6,500) | | Amortization | (17,069) | (10,601) | | Foreign exchange effects | (7,248) | 589 | | Balance at the end of the year | 65,047 | 68,566 | Changes in Lease Liabilities (USD thousands) | Item | September 30, 2024 | September 30, 2023 | |:---|---:|---:| | Balance at the beginning of the period | 77,405 | 27,205 | | New contracts | 17,004 | 58,117 | | Payments of lease liabilities | (15,518) | (9,000) | | Interest paid on lease liabilities | (6,012) | (3,828) | | Foreign exchange effects | (5,889) | 801 | | Balance at the end of the period | 71,025 | 70,547 | | Current liabilities | 25,983 | 18,976 | | Non-current liabilities | 45,042 | 51,571 | - New lease contracts amounted to USD 17,004 thousand for the nine-month period ended September 30, 2024[58][59] - Payments of lease liabilities totaled USD 15,518 thousand for the nine-month period[59] 15 Loans and Financings Nexa's total loans and financings increased to USD 1,863,344 thousand as of September 30, 2024, from USD 1,725,566 thousand at the beginning of the year. This was driven by new debt issuances, including a USD 600,000 bond offering and an ESG-linked credit line, partially offset by significant bond repurchases and payments Loans and Financings Composition (USD thousands) | Type | September 30, 2024 Total | December 31, 2023 Total | |:---|---:|---:| | Eurobonds – USD | 1,236,798 | 1,212,554 | | BNDES | 205,545 | 208,947 | | Export credit notes | 228,260 | 237,862 | | Debentures | 125,361 | - | | Other | 67,380 | 66,203 | | Total Loans and Financings | 1,863,344 | 1,725,566 | - New loans and financings amounted to USD 798,147 thousand for the nine-month period ended September 30, 2024[60] - The company concluded a USD 600,000 bond offering in April 2024 and repurchased USD 484,504 thousand of its 2027 Notes and USD 99,499 thousand of its 2028 Notes[60][61] - An ESG-linked credit line of BRL 200,000 (USD 40,030) was drawn from BNDES in June 2024, with a spread rate that can be reduced if ESG goals are met[60] - Nexa was in compliance with all financial and qualitative covenants as of September 30, 2024[61] 16 Asset Retirement, Restoration and Environmental Obligations Total asset retirement, restoration, and environmental obligations decreased slightly to USD 286,779 thousand as of September 30, 2024. This was influenced by divestments, foreign exchange effects, and a significant 'out of period' adjustment for old non-operational structures in Peru, partially offset by additions and interest accrual Changes in Obligations (USD thousands) | Item | September 30, 2024 Total | September 30, 2023 Total | |:---|---:|---:| | Balance at the beginning of the period | 314,919 | 266,319 | | Additions | 20,959 | 2,597 | | Payments | (10,587) | (7,683) | | Classified as liabilities associated with assets held for sale | (23,591) | - | | Divestment - write-off | (14,370) | - | | Foreign exchange effects | (20,627) | 5,884 | | Interest accrual | 20,458 | 19,871 | | Remeasurement - discount rate | (350) | (5,259) | | Balance at the end of the period | 286,779 | 281,729 | | Current liabilities | 55,699 | 36,281 | | Non-current liabilities | 231,080 | 245,448 | - An 'out of period' adjustment of USD 13,416 thousand was recognized for asset retirement obligations related to old and non-operational structures in Peruvian subsidiaries[63] - The credit risk-adjusted discount rate used for Peru was between 7.42% and 10.57% (down from 10.86%-12.52% at Dec 31, 2023) and for Brazil was between 6.45% and 7.83% (down from 6.94%-11.11% at Dec 31, 2023)[61] 17 Long-Term Commitments Long-term commitments include the Magistral Project, facing an EIA rejection, and environmental guarantees for Brazilian dams - The Peruvian Government postponed the deadline for the Magistral Project's Accreditable Investment Commitment from September 2024 to August 2028. The unexecuted commitment is USD 323,000 thousand, with a potential penalty exposure of USD 97,029 thousand if not completed[64] - SENACE formally rejected the Modification of the Environmental Impact Assessment (MEIA) for the Magistral Project in May 2024[64] - Nexa estimates an environmental guarantee need of approximately USD 21,293 thousand for dams in Minas Gerais, Brazil, with 50% to be contracted by December 31, 2024, and the remainder by the end of 2026[65] 18 Impairment of Long-Lived Assets A net impairment loss of USD 25,399 thousand was recognized, including a significant loss for Magistral Project offset by reversals Impairment (Losses) Reversals Summary (USD thousands) | Item | 2024 | 2023 | |:---|---:|---:| | Magistral Project | (58,435) | - | | Cerro Pasco CGU | 22,206 | - | | Morro Agudo | 10,291 | (57,702) | | Pukaqaqa Project | 3,978 | - | | Others individual assets | (3,439) | (1,395) | | Total Impairment (losses) reversals | (25,399) | (59,097) | - An impairment loss of USD 58,435 thousand was recognized for the Magistral Project following the rejection of its MEIA[69] - An impairment reversal of USD 22,206 thousand was recognized for the Cerro Pasco CGU, driven by increased short-term and long-term metal prices[69] - Key assumptions for impairment tests include long-term metal prices (zinc price USD 2,930/t for 2024), discount rates (Peru 7.08%, Brazil 7.64% for 2024), and exchange rates (BRL x USD 5.66 for 2024)[71] 19 Events After the Reporting Period Subsequent to the reporting period, Nexa Atacocha's Board of Directors convened a General Shareholders' Meeting to approve a capital increase of up to USD 37,000 thousand to fund the Cerro Pasco Integration Project - On October 18, 2024, Nexa Atacocha's Board of Directors called a General Shareholders' Meeting for November 18, 2024, to approve a capital increase of up to USD 37,000 thousand in cash[74] - The purpose of the capital increase is to fund the development of the Cerro Pasco Integration Project[74]